Tag Archives: Pfizer

Healthcare and drug companies are looking to join a market largely held by hospitals: injectable drugs, a $7 billion industry that often experiences shortages.

Drug mogul Becton Dickinson (BD), for example, plans on introducing 20-30 new injectable medicines to the US over the next few years, some of which have been in short supply. International drug companies are also seizing the market. Jordan-based Hikma Pharmaceuticals will launch 5-10 products in the next few years, also introducing a few of which have been scarce.

Companies like BD are attracted to this market because of the supply issue; and while sterilizing injectable drugs can prove difficult, the payoff is big: almost one billion vials are sold each year. However, companies might have to wait for the long-run, as producing sterile medicines can be expensive with low profits. Many companies left the market due to the cost, leaving some drugs to just one manufacturer. In addition, manufacturing problems, supply constraints and government investigation of manufacturing plants have pushed many drug firms to abandon facilities or slow down production.

What resulted was an even larger shortage in 2011: 183, as opposed to 23 five years earlier. According to the FDA, the shortages fell to 84 in 2012, partly because Pfizer began manufacturing limited cancer injectables and some plants, which were previously shut down, reopened.

Yet, in order to turn a profit, many companies are looking into raising prices by 10%. This would greatly affect hospitals and their drug buyers, who will most likely fight the increases. In order to cut costs and availability, drug companies should consider producing and selling drugs in multi-dose vials. Fluid Management Systems, Inc. has the technology to manage and monitor injectable drug inventories in multi-dose vials.

In June 2012, pharmaceutical mogul Pfizer announced Zoetis, Inc., the company’s spin-off group of its animal health sector. Zoetis is now looking to become a public company, and is seeking $2.2 billion in an initial public offering.

When Pfizer announced Zoetis last summer, the spin-off was set to be complete by July 2013; instead, Pfizer is selling Zoetis, along with some of its other non-drug units, in an effort to downsize Pfizer due to revenue losses. Last April, Pfizer sold its infant-nutrition business to Nestle for $11.9 billion.

Like Pfizer, Zoetis’ concentration is drugs. A third of the company’s revenue derives from anti-infectives, vaccines, parasite killers, food additives and other drugs. The remainder of its revenue comes from the livestock market and companion animals, or pets.

Since Zoetis specializes in animals, its business model is quite different from a human drug company. Namely, animals don’t have health insurance, so Zoetis receives money through different means: pet owners, ranchers and farmers who are willing to invest in the company. Zoetis doesn’t make blockbuster drugs like its parent; yet, because animal drugs aren’t bound to similar patent rules as human drugs, drug developers don’t have to worry about generic competition.

Pfizer is offering 86.1 million shares for purchase, $22-25 each. On September 30, Zoetis was almost $580 million in debt; in early January, the company was able to raise $3.65 billion in its first public debt sale. Zoetis forecasts an annual growth of 5.7% from now to 2016 — human medicines have higher drug failure rates than animal medicines, since there are less safety concerns, and animals have lower life expectancies.

Pfizer has many pharmaceutical competitors: Merck, Bayer, Boehringer, Ingelheim, Newport Laboratories and Sanofi-Merial. Bayer’s newest drug, the blood thinner Xarelto, is facing stiff competition from Pfizer’s blood thinner Eliquis, which recently won approval in the US. Though Pfizer is downsizing, it is still coming out on top in the human medicine world.